Managing your contingent workforce

The contingent workforce consists of an increasing number of individuals employed on a project-specific, non-permanent basis. They provide organisations with the ability to adjust quickly to changing market and business needs, can allow companies to scale-up and scale-down as required and, perhaps most significantly, they can bridge any skills gap an organisation may be facing.

Contingent workers aren’t a new concept, they have played a role for many years to provide skills for specific projects when required. But they are rapidly becoming a cornerstone of the modern-day organisation, with 1 million of Australia’s workforce now independent contractors¹. There are several key factors behind the growth of contingent workers in the modern workforce:

Skills sourcing

Interest in the contingent labour market has been fuelled, in part, by the persistent skills gap. With 79 per cent of employers still experiencing skills shortages, contingent workers offer much-needed assistance in addressing these gaps.

Adapting to change

A desire for flexibility is also motivating more organisations to embrace the contingent workforce model. Flexibility is paramount for companies addressing seasonal fluctuations, market-driven shifts and changing customer needs. Contingent workforces can facilitate an organisations ability to rapidly adapt to these changes.

The convergence of globalisation and technology creates greater mobility between roles than ever before and intermediary platforms connect supply with demand, enabling talent and employers to seek each other out, on more equal terms anywhere in the world².

A new world of work

The onset of the Fourth Industrial Revolution is fundamentally reshaping our perception of ‘the worker’. Research³ is pointing towards the ‘job’ soon becoming a relic of the Industrial Era. Instead, companies will need to construct agile, cross-functional teams, borrowing talent for defined periods to tackle the increasingly intricate challenges that organisations confront.

With 49 per cent of organisations using temporary or contract workers to gain skills that are required for projects, leaders must integrate this growing talent network as part of their workforce strategy, or bear the greatest risk of all – being left behind.

Strategies for success

Thriving in the new world of work will therefore require a change in mindset and adopting an approach that breaks down the barriers between permanent and temporary staff to deliver the right talent, at the right time, regardless of source or classification.

This transformation isn’t a small task, but there are three key pillars of a successful contingent workforce management strategy.

Policy

Prior to engaging with this talent network, organisations must ensure a firm understanding of the rules and regulations governing the contingent workforce.

Misclassification remains one of the greatest risks, with severe financial and reputational repercussions for those who fail to comply with legislation. In 2024, the Closing Loopholes Bill was passed in Australia, and around the world we’ve seen well-known cases such as Uber settle two class-action lawsuits totalling $100 million that enabled keeping their drivers classified as independent contractors instead of employees. Even going back to the early 2000s, a class-action lawsuit against Microsoft resulted in thousands of temporary workers being reclassified as permanent and costing Microsoft $97 million. Often, misclassification is the result of mistakes by organisations who are unaware of rules or lack workforce visibility, but the financial risk and outcomes will be the same.

Organisations must also establish rigorous processes to ensure that employee and customer data is protected as the workforce becomes more fluid. A comprehensive selection and vetting process, along with well-structured onboarding, training and offboarding programs, can mitigate the risk of information loss or security breaches.

Productivity

The traditional understanding of productivity, tied to being the first in the office and the last to leave, no longer holds sway with the incorporation of contingent workers.

With offshoring making a comeback, and remote work success demonstrating the feasibility of utilising talent irrespective of geographic location, contingent workers must be managed with metrics that monitor outcomes. Indeed, the nature of the contingent worker means that organisations have very little scope to dictate or control the means and manner in which work is completed.

Building trust in the temporary workforce is integral, and a clearly defined Statement of Work can instil accountability by connecting talent to specific timelines and deliverables. A Statement of Work defines all the aspects of a project including the activities involved, the deliverables and the timeline. This helps to determine the terms and conditions that all parties can agree on to work toward project outcomes.

People

The rise of the contingent workforce adds complexity to the roles of HR, culture and talent acquisition specialists, as traditional engagement strategies may not fully apply. To support temporary talent effectively, consider crafting a culture tailored specifically to your contingent workforce and their contributions. While perks like extended holidays and wellness programs may have less impact, certain aspects of culture transcend employment contracts. Provide opportunities for learning and development, include them in team meetings and involve them in team building when possible, to deepen the relationship with contingent workers.

Up the tempo

If you’re already making use of a recruitment partner such as Hays, once you have established these structural pillars in your organisation, consider using a Vendor Management System (VMS) that allows you to manage your entire contingent workforce with labour hire organisations with ease.

Refine your strategy

A VMS serves as your strategic toolkit to plan, engage, deploy and measure with purpose when using several vendors to manage your contingent workforce.

Once integrated into the workforce, it can increase visibility, offering insights into skillsets, tenure and project progress, allowing you to create talent networks that can be strategically deployed and redeployed to meet your organisation's evolving needs.

Leveraging a range of real-time data analytics tied to specific project objectives provides oversight on top performers (and their associated costs) while spotting any missed milestones. Instant identification enables you to work with teams to identify barriers and steer the project back on course, preventing extensive rework or delays.

The implementation of a sophisticated VMS can elevate the integration of temporary talent from just-in-time⁴ workers to key assets of your workforce management strategy, ensuring that the right talent is deployed where it’s most needed.

A new world of work

The new world of work is undeniably more complex. With continued skills gaps and a volatile market, organisations find themselves compelled to adapt at unprecedented speeds.

Survival will require companies to learn to work with the contingent labour market. But in order to thrive, managing your contingent workforce effectively can help you to remain compliant, easily track your performance and oversee a resourcing process that consists of thousands of interactions among various stakeholders and frequently disconnected technologies.

[1] https://www.abs.gov.au/statistics/labour/earnings-and-working-conditions/characteristics-employment-australia/latest-release

[2] https://www.deloitte.com/content/dam/assets-shared/legacy/docs/perspectives/2022/dttl-hc-english-opentalenteconomy.pdf

[3] https://www2.deloitte.com/us/en/insights/topics/talent/new-work-models.html

[4] https://www.shrm.org/resourcesandtools/hr-topics/technology/pages/technology-better-manage-contingent-workers-vms-msp.aspx